This op-ed was originally published in the Vancouver Sun and is a collaboration between Paul Finch, Jared Melvin and Harpinder Sandhu

Vancouver and British Columbia have been gripped by a housing affordability crisis that has deprived an entire generation of the ability to rent or own housing that fits their needs. Working people are seeing their discretionary income plummet due to rising real estate prices, which dwarf rising wages or savings on lower taxes and cheaper consumer goods.

While politicians of all stripes recognize the crisis cannot be ignored, they also understand that attempts to lower the value of real estate risk collapsing a key economic driver of the province and erasing the home equity that many owners now depend on to retire or sustain their existing debt.

The crisis extends to business owners who struggle to cope with massive rental increases that threaten their margins and create a wider and more dramatic gap between the wages of their workforce and the patrons they serve.

Everyday, we talk to union members – with secure employment and regular negotiated wage increases – who are finding it increasingly difficult to afford life in Metro Vancouver. Workers are struggling to find housing for their families, leading many to move further away from work and others to leave the province altogether. B.C. is losing productivity and experienced workers.

The solution to the affordability crisis at the provincial level is simple: tax real estate speculation according to value and use that revenue to pay for affordable housing and infrastructure.

On the municipal level, the solution is even more direct: change zoning practices to benefit working and middle class families, instead of real estate speculators who currently reap the rewards of rising land values.

In order to accept this solution, we need to understand the fundamentals behind the crisis.

While foreign investment acts as a catalyst by setting a high bar for real estate sales, it is financial institutions that drive up prices by approving larger mortgages than they would otherwise allow, spurring domestic buyers to chase property prices that would otherwise be regarded as high-end anomalies.

The increasing size of loans issued by financial institutions has manifested as a privately levied "tax" on renters. While speculators simply have to pay the principal on a loan to break even, the wildly increasing interest payments are born by the occupants as higher rent payments.

This means that speculators profit from ever increasing real estate values, while the actual productive value of land – the rent it produces – is harvested by the lenders. These windfall gains are rarely taxed.

If the province increases income taxes to pay for affordable housing, they are simply adding to the living costs voters already pay to the new class of private tax collectors. How then can the government raise funds and curb speculation without adding costs to the middle class?

The answer is for the government to reduce the ability of private financial institutions to levy taxes through larger loans and interest payments by instituting a provincial tax on land value, and using the proceeds to fund affordable public housing and key infrastructure.

The key driver of value for real estate is its proximity to infrastructure. In a city like Vancouver, this means green space, public transit, roadways, schools, hospitals and commercial services. Therefore, infrastructure projects that raise the value of surrounding land can be funded over time by raising bonds which are paid by taxing the heightened value.

Speculators will still reap significant profits, but they will also pay a portion to the publicly funded projects that give them value.

This is why, in a previous op-ed to the Vancouver Sun entitled "Fund Transit by Taxing Land Speculators", BCGEU Treasurer Paul Finch called for the province to fund transit improvements by taxing the increase in speculative value of the real estate around new transit infrastructure.

When cities tax development with programs such as development cost levies (DCLs in Vancouver), they simply raise the value of land by paying for enhanced amenities, whose costs are ultimately downloaded onto the end owner and renter. By taxing land value instead of development, the cost of development decreases as land value speculation is stabilized.

As union leaders, we have seen any wage increases our members have negotiated quickly gobbled up by the rising cost of housing. Implementing a provincial land value tax and closing loopholes that artificially raise housing prices can help make life more affordable for working people by stabilizing real estate prices and providing funds to build badly needed public housing and infrastructure.

Paul Finch is Treasurer of the B.C. Government and Service Employees’ UnionJared Melvin is the Vice President of CUPE 176Harpinder Sandhu is a Regional Director of CUPE 1767